Is Samsung preparing to split in two?

Samsung's fund management company has reportedly advised the tech giant it needs to increase payouts

Samsung could be prepping to split in two in order to increase payouts, new sources are claiming.

According to South Korean news outlet Seoul Economic Daily, US fund Elliot Management, which owns 0.6% of Samsung, has told the company it needs to split in two to maximise payouts. Half of the company would become a holding company, while the other half would be the operating arm.

Advertisement - Article continues below

This means Samsung would be able to pay out an estimated 30 trillion won (20.6 billion) in a special dividend, maximising the company's investment. Other suggestions from the company include appointing independent directors and returning 75% free cash flow to investors.

Samsung is apparently due to make an announcement on Tuesday regarding its plans, although whether the South Korean company will release full details or just how it plans to change its fortunes remains to be seen.

"Even if Samsung Electronics does not comment on specifics such as the timing of a split ... the firm will at least say it will implement ownership structure changes in a reasonable manner," HI Investment said in a report on Monday.

Splitting the company could also help the founders of Samsung Group make more money out of the company at a particularly turbulent time, following the recall of its flagship Galaxy Note 7 phablet.

Advertisement
Advertisement - Article continues below
Advertisement - Article continues below

"It's difficult to argue with the logic of Elliott's proposals," David Smith, head of corporate governance at Aberdeen Asset Management Asia, told Reuters, "A simpler structure is certainly preferable, and yes most would agree they can afford to pay out more.

"What is important is that these changes should benefit all involved, including family, group, and minority shareholders," he said.

Featured Resources

Top 5 challenges of migrating applications to the cloud

Explore how VMware Cloud on AWS helps to address common cloud migration challenges

Download now

3 reasons why now is the time to rethink your network

Changing requirements call for new solutions

Download now

All-flash buyer’s guide

Tips for evaluating Solid-State Arrays

Download now

Enabling enterprise machine and deep learning with intelligent storage

The power of AI can only be realised through efficient and performant delivery of data

Download now
Advertisement

Recommended

Visit/mobile/mobile-phones/354759/samsung-galaxy-z-flip-hands-on-review-samsung-flips-its-lid
Mobile Phones

Samsung Galaxy Z Flip hands-on review: Samsung flips its lid

12 Feb 2020
Visit/mobile/mobile-phones/354754/samsung-unveils-new-galaxy-z-flip
Mobile Phones

Samsung unveils new Galaxy Z Flip

11 Feb 2020
Visit/mobile/mobile-phones/354752/samsung-galaxy-s20-ultra-hands-on-review-room-to-zoom
Mobile Phones

Samsung Galaxy S20 Ultra hands-on review: Room to zoom?

11 Feb 2020
Visit/mobile/mobile-phones/354749/samsung-galaxy-s20-hands-on-review-another-slam-dunk
Mobile Phones

Samsung Galaxy S20 hands-on review: Another slam-dunk?

11 Feb 2020

Most Popular

Visit/mobile/mobile-phones/355088/apple-lifts-iphone-purchase-restrictions
Mobile Phones

Apple lifts iPhone purchase restrictions

23 Mar 2020
Visit/infrastructure/server-storage/355118/hpe-warns-of-critical-bug-that-destroys-ssds-after-40000-hours
Server & storage

HPE warns of 'critical' bug that destroys SSDs after 40,000 hours

26 Mar 2020
Visit/operating-systems/microsoft-windows/355105/microsoft-puts-windows-development-on-lockdown
Microsoft Windows

Microsoft puts Windows development on lockdown

25 Mar 2020
Visit/software/355113/companies-offering-free-software-to-fight-covid-19
Software

These are the companies offering free software during the coronavirus crisis

25 Mar 2020